Rolex

Rolex

Feb 24, 2025 300m

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Episode Description

Rolex is a series of paradoxes. They sell obsolete and objectively inferior mechanical devices for 10-1000x the price of their superior digital successors… and demand is stronger than ever in history! Their products are comparable to a Hermès Birkin bag in price, luxury status and waitlist times… yet they produce over 1m units / year (roughly 10x annual Birkin production). They make the most universally recognized and desired Swiss watches… yet their founder wasn’t Swiss and didn’t start the company in Switzerland! If Rolex were publicly traded, they’d almost certainly be among the top 50 market cap companies in the world… yet they’re 100% owned by a charitable foundation in Geneva that (among other things) literally just gives away money to local people in the city.

Tune in for one of the most fascinating and admirable companies we’ve ever covered on Acquired. We had an absolute blast making the episode, and hope you enjoy it as much as we did!

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‍Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.

AI-Generated Summary

The Story and Paradoxes of Rolex

Rolex is a brand known for its series of paradoxes, including being a high-demand but low-supply product, selling obsolete mechanical devices for high prices, and its hidden mainstream popularity despite being privately owned. The founders established the company during turbulent times and cleverly created a brand that became synonymous with luxury and status.

Rolex vs. the Quartz Crisis

The Quartz Crisis significantly impacted the Swiss watch industry, as companies like Omega struggled to adapt to the rise of quartz technology. Rolex, however, maintained a focus on mechanical watches, ultimately positioning itself as a luxury brand through careful strategy and management, avoiding the panic that swarmed around much of the industry.

Marketing and Brand Strategy

Rolex's marketing historically centered around the lifestyle of success and achievement, collaborating with athletes and public figures to solidify its image as a brand for those who command the world. The company’s marketing transformed during the quartz crisis, adapting to focus on craftsmanship, durability, and the values of high-quality mechanical watches.

Rolex's Operating Model and Growth Strategy

Rolex operates on a vertical integration model, controlling production and distribution closely. This approach allows Rolex to maintain its high standards for quality and brand integrity, differentiating itself from competitors. The company exhibits conservative growth principles to guard against overproduction and brand dilution.

The Auction Market and Collectors' Culture

The auction market for mechanical watches has thrived, with prestigious brands fetching high prices and creating a culture of exclusivity and desirability. Rolex benefits from this bidding frenzy through the secondary market, enabling it to maintain its status and appeal among collectors.

Future Considerations and Current Market Position

Today, Rolex stands as a dominant player, accounting for 30% of the swiss watch market by revenue. It continues adapting to changes while protecting its brand identity against market fluctuations, ensuring its legacy endures well into the future.